Low-income households are paying as much as double the normal price for basic household goods due to costly rent-to-own schemes, according to a report by Barnado's.

The children's charity said stores that allowed hard-up consumers to buy goods such as kitchen appliances, furniture and televisions on credit, and repay the loans weekly, were in some instances charging hundreds of pounds more for the items than mainstream high-street retailers.

Its report, A Vicious Cycle: The Heavy Burden of Credit on Low Income Families, highlighted one case where a Beko washing machine cost £780 more when bought through a weekly payment store than at a traditional retailer, while in another a standard fridge freezer priced at £430 on the high street cost to £1,074 through a three-year rent-to-own scheme.

Barnado's said that while banks and standard retailers had been cutting back on the amount of credit they offered consumers in recent years, rent-to-own credit companies like Brighthouse and Buy As You View appeared to be establishing "a small, but significant position in the provision of credit to low-income households".

It said many families it worked with felt they had no choice but to try rent-to-own providers and other alternative lenders, as they did not have access to banks which provide overdraft facilities and direct debit.

While these companies are acting perfectly legally, Barnado's said it was concerned about the prices they charged and the confusing way in which products were marketed. As well as charging annual interest rates of up to 49.9% in some cases, it claimed the initial price of the product was often higher than in other stores, and manufacturer model numbers were not displayed, making it difficult for consumers to compare prices. Eight calls were made to retailers to ask for model numbers of particular products, and all requests were refused.

When researchers did shop around, they found that in some instances consumers were paying more for items on several fronts. In the case of the Beko washing machine, the list price at Brighthouse was £150 more than at Comet, while two years' service cover was sold for £382, compared with £130 at Comet (although the Brighthouse policy also covered returning the goods and cancelling the credit agreement). When the interest charged by Brighthouse was added, the cost of buying the item over the maximum three-year term came to £1,250, compared with £470 for an outright purchase from Comet.

The charity said it wanted to see the Office of Fair Trading bring in stricter rules on rent-to-own lenders, compelling them to clearly display the high street equivalent prices of their products, and the model numbers.

"In these tough economic times, the most vulnerable families in society are being lured into an unaffordable debt trap by a morally bankrupt lending industry," said Barnardo's chief executive Anne Marie Carrie.

"Barnardo's is calling on the Office of Fair Trading to help protect families from being unwittingly pushed further into poverty by compelling these unscrupulous lenders to make clear their extortionate rates."

These schemes and other forms of high-cost credit, including payday loans and doorstep lending, are adding to the problems faced by low-income households, Barnado's said. Government figures show that in 2009/10, one in five households who had borrowed money and had an annual income of less than £13,500 reported spending more than 30% of their income on servicing debts and about 41% had debts that were equivalent to 60% or more of their income.

While the typical cost of paying off a £100 loan over 12 months was £112 if taken from a credit union, this rose to £142 for a pawnbroker and £173 for a rent-to-own loan.

Barnado's said the government needed to act to prevent more households being forced to take on high-cost borrowing. It called for better safety nets for borrowers and alternative schemes to help low-income households save so they are not forced into borrowing. It recommended enabling the Post Office to offer access to credit unions and improving access to basic bank accounts, alongside offering better money advice.

"The poorest families are stuck between a rock and a hard place, with one in 10 households on low incomes managing their finances without access to mainstream banking services," said Currie.

"Preventing families from resorting to exploitative rent-to-own arrangements involves providing both good financial advice and fit-for-purpose bank accounts for those living on the tightest budgets."

Brighthouse, which has 240 stores around the UK and also offers internet sales, said it was a responsible lender and that the cash prices of the goods it sold were monitored against its competitors. A spokesman said: "Our rent-to-buy model allows low-income families access to a range of products that they might not otherwise be able to afford.

"If Barnardo's has any issues or concerns about our business or how we operate we would be very happy to discuss these with them."

The OFT said it had already set out guidance for lenders in this sector and made recommendations to the government following a review of the market.

It added: "The OFT is aware of the Barnardo's report and will look at what it says, as it does any concerns which it receives from organisations or individuals. It is not in a position to comment in further detail at present."